CRYPTO MOVERS AND PRICES
Results were mixed this morning with ETH continuing to rally to new all-time highs. Dogecoin (DOGE) saw the highest gains in the Top 10 and was up 34%.
Crypto Story of the Day
Ethereum (ETH) has achieved new all-time highs of about USD 3,400. The move coincides with recent endorsements of ETH that tend to overlook mid-term technical uncertainty for the network.
ETH’s all-time high has coincided with record-setting on-chain metrics. For example, the number of monthly active Ethereum addresses, defined as addresses either receiving or sending, totaled 9.3 million in April. This surpasses the previous record for the metric, 9 million, achieved in January 2018. The number of daily transactions on the network also reached an all-time high on April 22 with a total of 9.5 million.
In April, the network set a record for daily transaction volume of ETH, roughly USD 12.2 billion. In Q1 2021, the network’s total transaction volume of ETH reached about USD 32 billion. Total capital locked in various DeFi trading venues has also set new record highs, reaching USD 77.2 billion yesterday due to inflows of new capital and the appreciation of locked assets.
These readings come as the network continues to undergo a range of complex technical upgrades while transitioning to proof-of-stake. The latest of these was the Berlin upgrade, initiated in mid-April, which came with significant technical issues.
Ethereum has also enjoyed endorsements by public figures. For example, Mark Cuban said on a recent crypto podcast that he believes “the applications leveraging smart contracts and extensions on Ethereum will dwarf [BTC.]” Cuban also said he believes Ethereum’s proof-of-stake upgrades are “going to give some people a reason to use Ethereum as a store of value over [BTC].”
On Friday, a research note from FX trading firm Oanda opined that “Ethereum is rising and not much seems to be in its way.”
Investors’ imaginations regarding complex blockchain applications have come out on top of more sophisticated considerations of Ethereum’s risks and challenges. We’ve continuously stated that crypto investors overlook the technical risks faced by Ethereum.
Moreover, with interest in blockchain applications having far outpaced understanding of the associated technology, Ethereum’s network metrics have also not received adequate scrutiny. For example, while the network has achieved 9.3 million active addresses, the figure should be viewed with some reservation considering that single actors have growing reasons to use multiple addresses.
Ethereum’s record-setting total transaction volume of ETH should also be interpreted in the context of the ubiquity of wash trading in various sub-sectors like DeFi trading and NFTs. In addition, these statistics are rarely compared to other financial platforms. Square, for example, had 36 million active monthly users in December 2020, yet at a USD 110 billion market cap is only about 1/4 the value of ETH.
As we saw in 2017 and during other periods, when the market's imagination for ETH runs, considerations of technical complications and other such risks are all but ignored by token price.